All posts tagged industry

Siemens has at last cut to the chase. Long criticized as cautiously-run, rumble-tumble of engineering businesses, some good, others less good, Germany’s flagship engineering company is making a good stab at focusing on the essentials of its admittedly still diverse portfolio. Siemens has defined its key businesses as “electrification, automation, and digitilization” in a presentation to investors Wednesday. Read More »

The shale-oil boom has buoyed U.S. refineries, but the industry’s image is still stuck in the past, its lobbyists say.

“For far too long, we as an industry have allowed others to define who we are,” said Charles Drevna, president of the American Fuel and Petrochemical Manufacturers, at the trade group’s annual meeting Monday. In a 2013 Gallup poll, he said, a majority of Americans held a negative view of the oil and gas industry – a distinction only shared with the federal government.

A federal government shutdown looms, and while understanding the politics of it all is a matter for the crew over at Washington Wire, its impact on American businesses is something Corporate Intelligence will be watching closely. We asked our reporters for a look at how each industry will feel the impact of Washington closing up shop, and we’ll post the updates as they come in.

More on this after the jump, including how a shutdown would be felt by agribusiness, retailers, traders, steelmakers and more…. Read More »

Hospital stocks surged while big health insurers slumped following President Barack Obama’s re-election, which solidified the future of a complex health-care overhaul law that promises a mix of coverage-expanding benefits and new pressure points for health companies.

The health sector still faces plenty of questions as the law is implemented in coming years, and the political tussle over federal spending challenges companies with strong tethers to Medicare spending. Still, similar to June’s Supreme Court ruling, which largely upheld the health law, the election clears away a big source of uncertainty by removing the chance for repeal under a Republican administration.

While President Obama’s health care reforms will have consequences good and bad for the industry, hospital operators are notable beneficiaries, he writes:

Hospital stocks in particular have received a bounce from Mr. Obama’s re-election. Companies such as HCA Holdings Inc. (HCA) are expected to benefit as around 30 million Americans gain insurance coverage starting in 2014, which should lessen the burden hospitals bear from patients who can’t pay their bills. HCA–the biggest for-profit hospital firm, which Goldman Sachs upgraded to buy from neutral–surged 6% to $32.78 in early trading Wednesday. Among other companies, Health Management Associates Inc. (HMA), jumped 9% to $8.40, and Community Health Systems Inc. (CYH) gained 5.6% to $30.30.

While hospitals also are facing lower Medicare payments, “the impact of reimbursement for previously ‘uncompensated care’ represents a major change and significant boost for these companies starting in 2014,” Goldman analysts said.

But which businesses in the industry could be on the wrong side of the law?

Managed-care companies are also expected to benefit by gaining millions of new customers, but this is offset by a squeeze on profit margins as key parts of the law click into place, such as a requirement to cover people with pre-existing conditions. All the major companies slumped in early trading, led by a 6.4% slide to $71.25 at Humana Inc. (HUM).

Goldman downgraded that firm to sell from neutral because of Humana’s heavy stake in Medicare Advantage plans, which are private insurers’ version of the government plan for the elderly, and face reimbursement pressure under the law.

“With health reform now more likely to move ahead following the election outcome, we see greater downside risk to Medicare Advantage, which we estimate comprises over 70% of the HUM’s earnings,” Goldman said.

As for the insurance companies, the impact depends on which part of the market they focus on:

WellPoint Inc. (WLP), which has a large position in individual and small-group health insurance markets that are expected to see the biggest impact from the health law, fell 4.2% to $58.71…

Cigna Corp. (CI), a company seen as having modest exposure to major changes under the law because of its focus on commercial plans for large, self-insured companies, slid 1.8% to $52.34.

Among smaller health insurers, those heavily focused on Medicaid–such as Molina Healthcare Inc. (MOH) and Centene Corp. (CNC)–climbed on the election results because the health-care law aims to expand the government plan for the poor to cover millions of more lives. Molina rose 3.8%, while Centene gained 5.5%.

- Jeremy Lazarus, president, American Medical Association: “The AMA is also committed to working with Congress and the administration to stop the nearly 27% cut scheduled to hit physicians who care for Medicare patients on January 1. It is time to transition to a plan that will move Medicare away from this broken physician payment system and toward a Medicare program that rewards physicians for providing well-coordinated, efficient, high-quality patient care while reducing healthcare costs.”

- Ron Pollack, executive director, Families USA: “An important challenge also lies ahead now that states can expand their Medicaid programs to more low-income adults. To enable this to happen, the federal government is providing unprecedented fiscal support to the states: 100% funding of expansion costs in the first three years and never less than 90% thereafter. This guarantee is essential for governors as they decide whether their programs should cover more low-income adults. It is therefore crucial that upcoming federal budget decisions give governors clear assurances that this funding is stable and won’t be reduced.” Read More »

Update: The WSJ’s Jeff Bennett reports that GM’s Opel unit and Peugeot are looking to collaborate on specific projects and technology challenges, but are not intent on creating a full-fledged joint venture for their respective auto operations.

Instead, people familiar with the companies’ plans say GM’s German subsidiary and the auto operations of the French company want to find specific areas — such as small car engineering or engine technology — where they can combine forces and cut costs. PSA and Opel could also combine their purchasing operations, in hopes of getting better prices from parts makers in return for larger-volume orders. No definite deals have been struck in any case, people familiar with the discussions say. GM holds a 7% stake in PSA, which it agreed to buy in February for $420 million.

GM Vice Chairman Steve Girsky, who’s overseeing the overhaul of the Detroit auto maker’s money-losing European operations, has said in the past he wants to keep his options open as he looks for ways to salvage Opel. Both companies are under pressure to make decisions soon. Peugeot is estimated to be burning cash at a rate of 200 million euros a month, though it hopes to reach break even cash flow by 2014. GM lost $361 million in Europe during the second quarter.

What follows is an earlier report based on a story in a French newspaper that speculated GM and Peugeot were considering a broader auto alliance: